When an insurance company fails to fulfill its duties to its insured policyholders, it is acting in bad faith. Pennsylvania law is clear about the elements that must be proven in a bad faith insurance claim. While there is no requirement to show malicious intent or self-interest on the part of the insurance company, a plaintiff must provide clear and convincing evidence that there was no reasonable basis for the denied claim.
Insurance companies are typically multimillion-dollar operations with huge divisions of lawyers employed solely to defend the companies against all litigation. To build a strong case of bad faith against an insurance company, it is necessary to have evidence that supports the claim, including detailed records of every interaction whether written letters, emails, or phone conversations. For medical claims, all records of medical treatment are important as well as receipts for prescription medication and documentation of hospital stays. If the claim is for vehicle insurance, photographs of the car accident scene and testimonies from witnesses can be used.
Evidence Presented in Court
Once in court, evidence can be presented from expert witnesses in the field of insurance and claims handling. These testimonies can help jurors understand the complex process of insurance coverage and what is expected of insurers under the circumstances presented in the claim. An expert witness can explain if the claim is valid and if the insurer lived up to their obligations.
A lawyer for the plaintiff will often also present evidence regarding the insurance company’s standard practices. This may come to light through testimony by the adjuster that handled the claim in question. Some insurance companies instruct their employees to use delay tactics and other unfair practices to discourage claimants from collecting benefits. Training materials and internal handbooks of policies and procedures may also be used as evidence.
The claim file itself is key evidence that insurance companies will fight to obscure. The documents in the claim file will show exactly what kind of an investigation the insurer conducted, all of the communications with the insured, and what direction the claim was taking. Many insurers do not want any of their internal documents and files seen outside the company as they can reveal the exact strategies and tactics used in bad faith claims. Another way to demonstrate the obligations of insurers is through the standard of care as presented in the state statute.
Bad Faith Claims and Pennsylvania Laws
In some states, bad faith claims are filed under common law; however, in Pennsylvania, these cases fall under a statute that was enacted in 1990. Prior to the Pennsylvania Unfair Trade Practices and Consumer Protection Law, consumers were not allowed to directly sue bad faith insurance companies. Under this Pennsylvania statute, a plaintiff who has been harmed by bad faith may recover compensation for some or all of the following:
- Damages beyond the policy limits
- Emotional distress
- Legal fees
- Economic losses
- Punitive damages
In some cases, courts have awarded punitive damages in very high amounts to send a signal to wealthy insurance companies of their legal obligations to uphold the implied covenant of good faith and duty of care to their policyholders.
What are Some Common Examples of Bad Faith Insurance Claims?
In a bad faith insurance claim, an insurance company tries to underpay a claim or avoid paying it entirely. Typically, this is done by unreasonably denying or delaying a valid claim. Examples of insurance companies acting in bad faith include:
- Unreasonably denying a claim.
- Denying a claim without conducting a thorough investigation.
- Failing to properly investigate property damage in order to undervalue a claim.
- Failing to provide an explanation and documentation of a denial decision.
- Unreasonably delaying payment of a claim after the insured submits proof of loss.
- Intentionally misrepresenting policy provisions to minimize the benefits being paid.
- Intentionally misrepresenting the law regarding insurance claims.
- Not accepting a prompt, fair, and equitable settlement of a claim when liability is reasonably clear.
What is a Third-Party Bad Faith Insurance Claim?
Liability insurance is supposed to cover claims against the policyholder. The insurance company should pay the defense costs for the insured up to the policy limits. This is true also for settling claims against the insured. There is a duty of care that a case against the insured must be settled within the policy limits if an offer is made to do so. A third-party bad faith insurance claim occurs when the company either refuses to pay liability claims for losses incurred by others as a result of the insured’s actions or refuses to accept a reasonable settlement offer from someone who suffered an injury or loss due to the insured’s actions.
How Do I Know My Legal Rights Regarding My Insurance Policy?
Insurance policies are full of fine print that is loaded with complex legal terms. Most are lengthy documents that lay people cannot be expected to decipher, something the insurance companies count on. Anyone who suspects their insurance company is using delay tactics or otherwise acting in bad faith should consult with an experienced lawyer immediately. A lawyer can advise their client on how to file a lawsuit and can help determine the insured’s legal rights and the insurance company’s contractual obligations.
Pittsburgh Bad Faith Insurance Lawyers at AlpernSchubert P.C. Recover Compensation from Insurance Companies in Bad Faith Claims
If your valid insurance claim has been unreasonably denied, talk to an experienced Pittsburgh bad faith insurance lawyer at AlpernSchubert P.C. Our legal team will evaluate your case and help you obtain evidence to strengthen your claim. For more information and a free consultation, complete our online form or call us at 412-765-1888. Located in Pittsburgh, we serve clients throughout western Pennsylvania, including Allegheny County, Lawrence County, and Washington County.